Wizie.Com, LLC v. Borukhin et al
OPINION AND ORDER ORDER granting 7 Motion to Dismiss. Signed by District Judge Marianne O. Battani. (KDoa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
CASE NO. 2:14-cv-10391
HON. MARIANNE O. BATTANI
MIRA BORUKHIN and MB TRAVEL
CORPORATION, d/b/a DOWNTOWN
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS
This matter is before the Court on Defendants Mira Borukhin and MB Travel
Corporation’s, d/b/a Downtown Travel (“Downtown Travel”) Motion to Dismiss for Lack
of Personal Jurisdiction. Plaintiff, Wizie.com, LLC, filed the instant action for breach of
contract arising out of Defendants’ failure to pay for internet travel booking software
In its response brief, Plaintiff agreed to dismiss Defendant Borukhin, but
argued that there are sufficient contacts to establish personal jurisdiction over
Defendant Downtown Travel. The Court heard oral argument on the motion on June
12, 2014, and at the conclusion of the hearing, took the matter under advisement. For
the reasons stated below, Defendants’ motion is GRANTED.
STATEMENT OF FACTS
Plaintiff, Wizie.com, LLC, designs travel software products and is a Michigan
limited liability corporation.
Defendant Downtown Travel is a wholesaler of travel
products incorporated in New York and sells airline tickets to travel agents. Defendant
Mira Borukhin is the president of Downtown Travel. Borukhin has been dismissed from
In March 2010, the parties entered into an Internet Services Booking Agreement
whereby Plaintiff would provide Defendants with two of its business products. The first,
PerfectIBE, is an airfare search and booking engine that can be integrated into business
The second product is an internet-based airfare booking service, which
allows customers and travel agents to search for and purchase travel products using
Plaintiff’s representatives traveled to New York to solicit Defendants’
business. The contract was signed by Defendants in New York and a copy was faxed
to Michigan. In the contract, Defendants agreed to compensate Plaintiff a certain fee
per ticket sold in exchange for using Plaintiff’s software on its website.
Plaintiff alleges that it provided the services to Defendants, but Defendants have
refused to pay over $100,000 in fees. Defendants faxed and mailed copies of the
agreement to Plaintiff in Michigan and sent payments to Michigan. However, none of
Defendants or its representatives ever visited Michigan. In addition, Defendants called
Plaintiff’s office in Michigan for support and sold airfare to Michigan travel agents.
Plaintiffs also allege that Defendants’ website is accessible to and used by Michigan
residents to purchase airline tickets. The agreement contains a Michigan choice of law
Defendants do not dispute these allegations, but assert these actions are
insufficient to establish personal jurisdiction.
STANDARD OF REVIEW
Before answering a complaint, a defendant may move for dismissal based on
lack of personal jurisdiction over the defendant. Fed. R. Civ. P. 12(b)(2). “Where
personal jurisdiction is challenged in a 12(b)(2) motion, the plaintiff has the burden of
establishing that jurisdiction exists.” Am. Greetings Corp. v. Cohn, 839 F. 2d 1164,
1168 (6th Cir. 1988); see also McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178,
189 (1936) (plaintiff “must allege in his pleading the facts essential to show jurisdiction”).
If a district court rules on the motion before trial, the court, in its discretion, “may
determine the motion on the basis of affidavits alone; or it may permit discovery in aid of
the motion; or it may conduct an evidentiary hearing on the merits of the motion.”
Serras v. First Tenn. Bank Nat’l Ass’n, 875 F.2d 1212, 1214 (6th Cir. 1989) (quoting
Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). The district
court is granted considerable discretion in this decision and will be reversed only for
abuse of discretion. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991);
Mich. Nat. Bank v. Quality Dinette, Inc., 888 F.2d 462, 466 (6th Cir. 1989). The method
the court selects will affect the magnitude of the burden on the plaintiff to avoid
dismissal. Serras, 875 F.2d at 1214. Where, as is the case here, the court relies solely
on the parties’ affidavits to reach its decision on the motion, the burden rests on the
plaintiff to establish a prima facie showing of jurisdiction in order to avoid dismissal,
Intera Corp. v. Henderson, 428 F.3d 605, 615 (6th Cir. 2005), and the court must
consider the pleadings and affidavits in the light most favorable to the plaintiff.
CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6th Cir. 1996).
In considering 12(b)(2) motions, the court does not weigh the controverting
assertions of the moving party due to its interest in “prevent[ing] non-resident
defendants from regularly avoiding personal jurisdiction simply by filing an affidavit
denying all jurisdictional facts.”
CompuServe, Inc., 89 F.3d at 1262 (quoting
Theunissen, 935 F.2d at 1459).
The Michigan Supreme Court has broadly construed Michigan’s Long-Arm
Statute to provide for personal jurisdiction consistent with due process. See Audi AG
and Volkswagon of Am., Inc. v. D’Amato, 341 F. Supp. 2d 734, 742 (E.D. Mich. 2004).
Therefore, “the state’s jurisdiction extends to the limits imposed by federal constitutional
due process requirements and thus, the two questions become one.” Michigan Coal. of
Radioactive Material Users, Inc. v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir. 1992)
(citing Chandler v. Barclays Bank PLC, 898 F.2d 1148, 1150-51 (6th Cir. 1990)).
In order to subject a nonresident defendant to personal jurisdiction, due process
requires that he must “have certain minimum contacts with [the forum] such that the
maintenance of the suit does not offend ‘traditional notions of fair play and substantial
justice.’” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)). The defendant’s “conduct and connection with the
forum State” must be “such that he should reasonably anticipate being haled into court
there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The
party seeking to assert personal jurisdiction bears the burden of demonstrating that
such jurisdiction in fact exists. Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883,
887 (6th Cir. 2002). A party is subject to the personal jurisdiction of the Court through
either general or specific jurisdiction. See J. McIntyre Machinery, Ltd. v. Nicastro, 131
S. Ct. 2780, 2787-89 (2011). Whether general or specific jurisdiction exists turns on the
nature of the defendant’s contacts with the forum.
“A court may assert general jurisdiction over foreign (sister-state or foreigncountry) corporations to hear any and all claims against them when their affiliations with
the State are so ‘continuous and systematic’ as to render them essentially at home in
the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. ----, 131
S. Ct. 2846, 2851 (2011) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 317(1945).
Clearly, there is no basis for general personal jurisdiction over Defendant given the lack
of continuous and systematic contacts with Michigan.
See Mich. Comp. Laws §
600.711(3) (authorizing general jurisdiction over corporations that carry on “a
continuous and systematic part of its general business within the State”).
undisputed that Defendant does not have any physical contacts in Michigan and there is
no allegation that Defendant regularly conducts business in Michigan. Rather, Plaintiffs
assert this Court may reasonably exercise specific personal jurisdiction over Defendant
because of an ongoing contractual relationship between the parties.
Specific jurisdiction subjects a defendant to actions in the forum arising out of or
relating to the defendant’s contacts with the forum.
Helicopteros Nacionales de
Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984). In determining whether the exercise
of specific personal jurisdiction is proper, the Sixth Circuit follows a three-prong test
originally laid out in Southern Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381
(6th Cir. 1968):
First, the defendant must purposefully avail himself of the privilege of
acting in the forum state or causing a consequence in the forum state.
Second, the cause of action must arise from the defendant’s activities
there. Finally, the acts of the defendant or consequences caused by the
defendant must have a substantial enough connection with the forum state
to make the exercise of jurisdiction over the defendant reasonable.
Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000) (citing Mohasco, 401
F.2d at 381).
In order to be subject to specific persona jurisdiction, Defendant must have
“purposefully avail[ed] [itself] of the privilege of acting in the forum or causing a
consequence in the forum.” Mohasco, 401 F.2d at 381. “Purposeful availment” means
that the defendant’s “contacts proximately result from the actions by defendant himself
that create a ‘substantial connection’ with the forum State.”
Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475 (1985) (emphasis in original) (quoting McGee v. Int’l Life
Ins. Co., 355 U.S. 220, 223 (1957)). This requirement “ensures that a defendant will not
be haled into a jurisdiction solely as the result of ‘random,’ ‘fortuitous,’ or ‘attenuated’
contacts, or of the ‘unilateral activity of another party or third person.’”
Id. at 475
(quoting Keeton v. Hustler Magazine, 465 U.S. 770, 774 (1984); Helicopteros, 466 U.S.
Here, Plaintiff asserts Defendant purposefully availed itself to the forum by
entering into a contract with a Michigan company, sending faxes and emails to
Michigan, sending continuous payments to Michigan, and calling Plaintiff’s Michigan
office for technical support.
Plaintiffs do not dispute that Defendant: (1) is not
incorporated in Michigan; (2) does not own any property in Michigan; (3) does not pay
Michigan taxes; (4) does not have employees, officers, or shareholders who are citizens
of Michigan; (5) does not have any bank accounts in Michigan; (6) does not have any
representative who traveled to Michigan; and (7) does not have an office or mailing
address in Michigan. In addition, Plaintiff sent representatives to New York to solicit
business from Defendant, and the contract was signed in New York.
In support of its argument, Plaintiff relies on Air Products & Controls, Inc. v.
Safetech Intern., Inc., 503 F.3d 544 (6th Cir. 2007). In that case, the defendant failed to
pay for several purchases of goods from the plaintiff. Id. at 548. Facing an entry of
judgment for the unpaid amount in a separate lawsuit, the defendant fraudulently
transferred its assets to a third party. Id. The plaintiff then filed suit in Michigan for
fraudulent transfer, and the case was removed to district court. After the district court
dismissed the case for want of personal jurisdiction, the Sixth Circuit found that the
defendant purposefully availed itself to the forum based on the nine-year business
relationship between the parties. It noted that defendants reached out to the plaintiff in
Michigan by mailing purchase orders, mailing an application for an open credit account
to purchase plaintiff’s products, and contacting plaintiff hundreds of times “for purposes
of discussing and placing orders for goods.” Id. at 551. The court found that the
contacts were “not simply the result of unilateral activity on the part of [plaintiff].” Id. at
552. In other words, it was not merely a “one-time transaction, but [ ] a continuing
business relationship that lasted a period of many years.” Id. at 551. Moreover, the
court noted that the fraudulent transfer of the defendants’ assets was aimed directly at
the plaintiff, and thus the effects were felt in Michigan. Id. at 553.
Unlike Air Products, Defendant in this case did not place continuous product
orders over the course of several years or engage in tortious activity directly aimed at
Defendant placed one order for a single set of products to be used in
conjunction with its website. The contract provided for payment based on percentage of
sales, necessitating continuous payment. This does not operate to transform a single
contractual obligation into one that would have “ongoing far-reaching consequences in
[any] Michigan” industry. Lanier v. Am. Bd. of Endodontics, 843 F.2d 901, 911 (6th Cir.
1988). Again, unlike the defendant in Air Products, Defendant did not place hundreds of
orders giving rise to an extensive continuous relationship between the parties that
resulted in a substantial connection to the forum state. In this case, Defendant entered
into one contract. Thus, the fact that Defendant was required to send payments to
Michigan is of no jurisdictional consequence.
Importantly, Plaintiff reached out to New York to solicit business from Defendant;
Defendant never traveled to Michigan. The contract was signed in New York and then
faxed to Michigan. Although creating a continuing relationship with an out-of-state party
may give rise to personal jurisdiction, “‘an individual’s contract with an out-of state party
alone’ cannot ‘automatically establish minimum contacts.’” Kerry Steel, Inc. v. Paragon
Indus., Inc., 106 F.3d 147, 151 (6th Cir. 1997) (quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 478 (1985)). In addition to sending payment to Michigan, Defendant’s
only contacts with the forum are emails, faxes, and phone calls, which are exactly the
type of fortuitous and attenuated contacts that make an exercise of personal jurisdiction
over Defendant unreasonable in this case. The only reason Defendant had any contact
with Michigan is the result of Plaintiff’s choice to reside here.
See Int’l Tech.
Consultants v. Euroglas, 107 F.3d 386, 395 (6th Cir. 1997) (noting that “the only reason
the communications in question here were directed to Michigan was that [defendant]
found it convenient to be present there”).
Further, Plaintiff’s argument that the Michigan choice of law clause in the contract
supports an inference that Defendant would be expected to be haled into Michigan court
is unpersuasive. It is a choice of law clause, not a forum selection clause. The Court
could just as easily infer that Plaintiff included the provision with the expectation that it
would be required to commence litigation in foreign states against buyers who fail to
pay, and thus sought to protect itself from uncertainty by mandating the application of
Michigan law in out-of-state courts.
Insofar as Plaintiff argues for personal jurisdiction based on website interactivity,
that argument is off point. See Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d
883, 890 (6th Cir. 2002) (citing the website interactivity sliding-scale approach
articulated in Zippo Mfg. Co v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa.
1997)). The issue in the instant case is whether Defendant’s transaction with Plaintiff
subjects Defendant to the jurisdiction of Michigan, not whether Defendant’s website
creates jurisdiction with third-party customers in other forums. Any contacts involving
Defendant’s sale of a product to third parties through its website are unrelated to the
transaction at issue in this case. In other words, Plaintiff’s cause of action does not
arise out of Defendant’s potential website contacts with customers. See Calphalon
Corp. v. Rowlette, 228 F.3d at 721 (citing Mohasco, 401 F.2d at 381). Plaintiff sold a
product to Defendant; Plaintiff did not purchase a product through Defendant’s website.
Thus, the interactivity of Defendant’s website is irrelevant for jurisdictional purposes in
In sum, a single sales transaction is insufficient to establish purposeful availment
of the privilege of acting in Michigan by Defendant. The contacts in this case are too
attenuated and fortuitous for this Court’s exercise of jurisdiction to be reasonable.
Consequently, Plaintiff has failed to demonstrate a prima facie of personal jurisdiction
Accordingly, Defendants’ motion is GRANTED.
IT IS SO ORDERED.
Date: June 17, 2014
s/Marianne O. Battani
MARIANNE O. BATTANI
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing Order was served upon counsel of record via the Court's ECF System to their
respective email addresses or First Class U.S. mail to the non-ECF participants on June 17, 2014.
s/ Kay Doaks
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